GR L 13680; (March, 1960) (Digest)
G.R. No. L-13680. April 27, 1960.
MAURO LOZANA, plaintiff-appellee, vs. SERAFIN DEPAKAKIBO, defendant-appellant.
FACTS
On November 16, 1954, plaintiff Mauro Lozana and defendant Serafin Depakakibo entered into a partnership contract capitalized at P30,000 (plaintiff contributing 60% and defendant 40%) to operate an electric light and power system in Dumangas, Iloilo, under a franchise issued to Mrs. Piadosa Buenaflor. The franchise was cancelled by the Public Service Commission on May 15, 1955. Subsequently, plaintiff sold a generator (Buda diesel) he had contributed to the partnership to a new grantee, Olimpia D. Decolongon, on October 30, 1955. Defendant also sold equipment he contributed to another party. On November 15, 1955, plaintiff filed an action for replevin, claiming ownership and right to possess the generator and 70 wooden posts, alleging defendant wrongfully detained them. Defendant countered that the properties were contributions to the partnership and could not be unilaterally sold, and sought dissolution, accounting, and damages. The trial court, based on a stipulation of facts and defendant’s admission that they were “dummies,” declared the partnership contract null and void for allegedly violating the Anti-Dummy Law, and awarded possession of the properties to plaintiff.
ISSUE
Whether the partnership contract is null and void, thereby entitling plaintiff to recover his contributed properties individually, or whether the partnership is valid, requiring dissolution and liquidation instead.
RULING
The Supreme Court reversed the trial court’s judgment. The partnership contract is not null and void. The Anti-Dummy Law applies only to aliens, and both parties are Filipinos; thus, no violation occurred. The contract’s purpose—to operate under Mrs. Buenaflor’s franchise—was not inherently illegal or contrary to public policy. Any failure to secure Public Service Commission approval did not render the contract void ab initio. Consequently, the properties contributed (the generator and posts) became partnership assets and could not be unilaterally sold by a partner without consent. The proper remedy is dissolution and liquidation of the partnership, not an individual action for recovery of contributed properties. The case was remanded to the lower court for further proceedings consistent with this ruling.